The Morning Ledger: Companies Are Winning the Battle over Adjusted Earnings

The U.S. Securities and Exchange building in Washington, D.C., U.S., Oct. 5, 2016.

The Wall Street Journal

Good morning. Companies are proving to the U.S. Securities and Exchange Commission that they aren’t misleading investors with their use of unofficial accounting figures, Tatyana Shumsky writes.

Companies such as Coca-Cola Co. and Medtronic PLC are among the 35 out of 51 companies that have successfully proved this to the regulator. The record emphasizes how complexities and nuances in corporate accounting make it trickier for the SEC to police earnings.

Large companies have the resources to provide a defense of accounting practices the SEC may find contentious. Chief financial officers can draw help from their finance teams, consultants, legal counsel and even the board’s audit committee to respond to the regulator’s concerns.

CFO JOURNAL TODAY

U.S. consulting spending tops $58 billion in 2016.U.S. companies increased their spending on consulting by 7.1% in 2016, Ms. Shumsky reports, based on a report by Source Global Research released today. Spending rose as more companies sought advice on cybersecurity.

Huntsman-Clariant deal leads to accounting switch.HuntsmanClariant, the result of the merger of equals between Huntsman Corp. and Clariant AG, will report its financials under International Financial Reporting Standards. For Woodland, Texas-based Huntsman, it is a change from U.S. generally accepted accounting principles, Nina Trentmann reports.

THE DAY AHEAD

A worker at the U.S. Government Publishing Office reviews the production run of the 2018 budget in Washington, May 19, 2017.

European foreign direct investment hits new record. Foreign direct investment into Europe hit a record high in 2016, with 5,845 projects recorded, an increase by 15% year-on-year, according an Ernst & Young LLP survey released Tuesday. The U.K., Germany and France remained the top three destinations for foreign direct investment in 2016, capturing more than 51% of FDI inflows, Ms. Trentmann writes.

U.S. companies represent the biggest investors in Europe, accounting for 22% of all foreign direct investments in 2016. More than half of all FDI, however, arose from intra-European investment flows. Chinese direct investments into Europe rose by 25% to 297 projects, compared with 1,310 projects by U.S. companies.

Of the 505 investors that the consulting firm interviewed in March, 80% said they were concerned about potential tax, administrative and regulatory consequences following Britain’s exit from the European Union.

CORPORATE NEWS

This May 19, 2016, file photo shows the Apple logo in San Francisco, Calif., U.S.

Arconic and Elliot reach resolution. Arconic Inc. will give activist investor Elliott Management Corp. three spots on its board and will keep three for itself. Previous attempts to resolve the issue failed because of disagreements regarding the role Elliott’s nominees would play on board committees.

CBS extends CEO’s contract through 2021. CBS Corp. said it extended Chief Executive Leslie Moonves’s contract by two years. His annual salary will remain at $3.5 million and his bonus payments and long-term incentives aren’t changing either.

Chinese insurer in U.S. property deal. China Life Insurance Co. is buying a 95% stake in 48 commercial properties scattered throughout the U.S. in deal that values the portfolio at $950 million and highlights the growing appetite among foreign investors for real estate in markets they mostly have ignored until now.

U.S. union questions Anbang over ownership.Questions about the ultimate ownership of Anbang Insurance Group Co., one of China’s most acquisitive companies, are once again causing trouble for the company and one of its U.S. deals, the Financial Times reports.

JBS’s shares down after insider-trading allegations.Shares of Brazilian meatpacker JBS SA plunged more than 30% Monday, costing the company about $2 billion, after President Michel Temer accused its owners of insider trading as part of a bitter battle over the country’s corruption scandal.

REGULATION

Pedestrians pass in front of the offices of Citigroup in Canary Wharf, London, U.K., April 18, 2017.

‘Fiduciary’ rule to take effect June 9.The retirement-savings regulation known as the fiduciary rule will take effect June 9 without further delay, Labor Department Secretary Alexander Acosta said Monday.

Solar company Sunrun manipulated sales data.Former managers of Sunrun Inc., a large U.S.-based solar-energy company, said they were asked to postpone internally reporting hundred of cancellations when the company was preparing to go public in August 2015.

ECONOMY

Crude oil storage tanks are seen in Cushing, Ok., U.S., May 4, 2017.

Genscape

Trump proposal a surprise to OPEC.President Donald Trump’s proposal to sell half of the U.S.’s strategic oil reserve surprised energy markets on Tuesday since it counters efforts by the Organization of the Petroleum Exporting Countries to control supply in order to boost prices, Reuters reports.

Business leaders ask Tillerson to protect funds.More than 200 business leaders have written to Rex Tillerson, the secretary of state, urging him to ramp up support of the State Department and U.S. Agency for International Development Budget.

Federal Reserve’s Timothy Clark to retire.Timothy Clark, a senior member of the Fed, in charge of banking supervision, is retiring this summer. His departure follows that of former Fed governor Daniel Tarullo, who stepped down last month after nearly a decade at the U.S. central bank.

European manufacturing sector paces ahead. The eurozone’s economic recovery maintained its recent, stronger momentum in May as the currency area’s manufacturing sector added jobs at the fastest pace in 20 years, according to surveys of purchasing managers released Tuesday.

German economy accelerates.Germany’s economy picked up speed in the first quarter, led by rising exports and investment, cementing its role driving Europe’s economic upswing.

No deal on Greece’s debt relief.Eurozone finance ministers, the International Monetary Fund and the Greek government failed to hammer out a final deal on Greece’s debt relief and decided to postpone a decision for their next meeting in mid-June.

CFO MOVES

Gap Inc., a San Francisco clothing retailer, said it has appointed Dara Bazzanoas vice president, corporate controller and chief accounting officer, effective immediately. Ms. Bazzano previously served as the company’s principal accounting officer. She also served as vice president and corporate controller. Compensation details weren’t immediately available.

Enstar Group Ltd., a Hamilton, Bermuda, insurance holding company, said its finance chief Mark Smithwill step down, effective Dec. 31. Mr. Smith has served as Enstar’s CFO since August 2015 and will move into a consulting role with the company starting Jan. 1, for which he will receive a monthly fee of $62,500, according to a regulatory filing. He will be replaced by Guy Bowker, currently chief accounting officer and deputy CFO. Compensation details for Mr. Bowker weren’t immediately available.

Amgen Inc., a Thousand Oaks, Calif., biotechnology firm, has appointed Annette L. Such as vice president and chief audit executive, effective upon the filing of the company’s second quarter results. Ms. Such will at that time step down as the firm’s chief accounting officer. David W. Meline, Amgen’s current chief financial officer, will act as principal accounting officer until a new chief accounting officer has been appointed. Compensation details weren’t immediately disclosed.

China Taiping Insurance Holdings Co., a state-owned financial and insurance group located in Hong Kong, said it has appointed Zhang Ruohan as chief financial officer. Mr. Zhang previously served as joint secretary of the company. Compensation details weren’t immediately available.

The Morning Ledger from CFO Journal cues up the most important news in corporate finance every weekday morning. Send us tips, suggestions and complaints: kimberly.johnson@wsj.com.